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Oil Group Starts Political Giving as Congress Weighs Repeal of Tax Breaks

The American Petroleum Institute, the largest oil and gas industry trade group, will start backing political candidates this year as the U.S. considers repealing $46 billion in subsidies and imposing pollution rules.

The group, whose members include Exxon Mobil Corp. and Chevron Corp., would make donations separately from industry executives and employees, who gave $27.6 million mostly to Republican candidates for Congress last year, according to the Center for Responsive Politics in Washington. API has paid for advertising on policy issues and to lobby on legislation.

“This is adding one more tool to our toolkit,” said Martin Durbin, API’s executive vice president for government affairs, in an interview. “At the end of the day, our mission is trying to influence the policy debate.”

The Obama administration is proposing to end tax breaks for energy companies and to limit greenhouse-gas emissions, actions the API says will cost jobs and cut domestic production as fuel costs rise.

Durbin declined to say how much the Washington-based group hoped to donate. API spent $7.3 million to lobby Congress and the White House last year, ranking seventh behind six oil-and- gas companies, according to the Center for Responsive Politics.

Former Republican and Democratic aides in Congress and from the White House lobby for the group. They include David Castagnetti, an ex-chief of staff to Senate Finance Committee Chairman Max Baucus, a Montana Democrat, and Bruce Mehlman, a Commerce Department official under George W. Bush.

Balancing Donations

The oil group, which filed to set up the committee with the Federal Election Commission in May, will start distributing donations in the second quarter of this year, Durbin said. API has more than 460 members.

“Do we really need another oil-industry PAC in this city?” said Michael Gravitz, a lobbyist for Environment America who has opposed energy-industry efforts to open more areas offshore for drilling. “Their level of influence is pretty obvious, and large.”

The energy industry succeeded in blocking efforts by Congress to raise the liability oil companies would face for spills and to repeal subsidies the industry receives, he said.

Meredith McGehee, policy director for the Campaign Legal Center, a campaign-finance watchdog in Washington, said API may see opportunities to advance its agenda with Republicans in control of the U.S. House.

“This is the way the game is played,” she said.

Republican Donations

Oil and gas companies and groups with political committees, such as the Washington-based Independent Petroleum Association of America, gave about 77 percent, or $19.6 million, of their total contributions for 2009-2010 to the Republican party, according to the Center for Responsive Politics.

Oil and gas companies were the 15th largest source of political contributions leading up to the 2010 election.

Koch Industries Inc. was the industry’s largest contributor, giving $1.79 million to candidates, more than 90 percent of whom were Republicans. Exxon, which gave $1.33 million to congressional campaigns, was the second largest. More than 80 percent of Exxon’s money went to Republicans.

President Barack Obama’s proposed budget calls on Congress to repeal subsidies that would be valued at $3.6 billion for oil and gas companies in 2012. In a decade, the administration estimates the repeal would yield about $46 billion. Obama said in his State of the Union address that the industry can afford to pay higher taxes.

Tax Breaks Repealed

Congress has twice rejected requests to repeal the breaks.

The proposal would “lower revenue to the government by many billions of dollars as a result of foregone revenues from projects the tax hikes would prevent going forward,” Jack Gerard, the group’s chief executive officer, said in a statement.

API has said greenhouse-gas regulations issued by the Environmental Protection Agency are burdensome and a threat to the economic recovery. The agency says the rules support cleaner technologies and will lead to more “green” jobs.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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